EX-99 3 l00325aexv99.txt EX-99 PRESS RELEASE EXHIBIT 99 UNITED COMMUNITY FINANCIAL CORP. 275 Federal Plaza West Youngstown, Ohio 44503-1203 FOR IMMEDIATE RELEASE Patrick A. Kelly Chief Financial Officer (330) 742-0500, Ext. 2592 UNITED COMMUNITY FINANCIAL CORP. ANNOUNCES EARNINGS FOR FIRST QUARTER 2003 YOUNGSTOWN, Ohio (April 17, 2003) - United Community Financial Corp. (Nasdaq: UCFC), holding company of The Home Savings and Loan Co. and Butler Wick Corp., today reported net income of $5.0 million, or $0.16 per diluted share, for the quarter ended March 31, 2003 compared to $4.3 million, or $0.13 per diluted share, for the first quarter of 2002. "United Community had another strong quarter with a 23% increase in earnings per share over the prior year," said Douglas M. McKay, chairman and chief executive officer of United Community. "Margin expansion and strong mortgage banking operations contributed to this earnings growth. If the market remains stable we are anticipating similar results for the second quarter," McKay added. First Quarter Results United Community's net interest income for the three months ended March 31, 2003 increased $2.1 million over the same period in 2002, and noninterest income increased $217,000 over the same quarter in the previous year. These increases were partially offset by a $1.4 million increase in noninterest expense. The increase in net interest income is primarily a result of a decrease in interest expense of $3.7 million, which was partially offset by a $1.5 million decline in interest income. The decreases are a result of the decline in interest rates over the past year. Interest rate spread increased 58 basis points to 3.59% for the three months ended March 31, 2003 compared to 3.01% for the three months ended March 31, 2002. Noninterest income increased $217,000 to $8.0 million for the three months ended March 31, 2003 compared to $7.8 million for the same period in 2002. The primary reason for the increase is an increase in gains recognized on loans sold of $1.2 million. This increase was partially offset by a $257,000 decrease in gains recognized on securities, a $482,000 decrease in other income, a $207,000 decline in commission income and a $98,000 decrease in service fees and other charges. The decrease in other income was primarily due to the acquisition of stock through the demutualization of Anthem, Inc. in 2002, which Home Savings received since Anthem is the health care provider for its employees. Noninterest expense increased $1.4 million in the first quarter of 2003 compared to the same period in 2002 primarily as a result of a $1.2 million increase in salaries and employee benefits and a $525,000 increase in equipment and data processing. The increase in salaries and employee benefits is primarily due to a $500,000 charge for post retirement benefits as a result of increased heath care costs and salaries from the acquisition of Potters Financial Corp. (Potters) that occurred in the second quarter of 2002. These increases were partially offset by decreases of $207,000 in other noninterest expense and $249,000 in the amortization of the core deposit intangible related to the acquisitions of Potters and Industrial Bancorp. The decline in other expense is primarily due to charges recognized in the first quarter of 2002 as a result of the early extinguishment of debt that did not reoccur in 2003. During 2002, United Community determined that it was advantageous to extinguish debt early and incur associated fees due to economic conditions and cash inflows from sales of loans. Financial Condition United Community's return on average assets and return on average equity were 1.00% and 7.25%, respectively, for the three months ended March 31, 2003. The returns on average assets and average equity were 0.87% and 6.42%, respectively, for the three months ended March 31, 2002. Total assets increased by $3.7 million, or 0.19%, to $2.0 billion at March 31, 2003 compared with December 31, 2002. Securities increased $67.7 million, other assets increased $1.0 million, loans increased $1.2 million and deposits declined $1.3 million. These changes were funded by decreases of $56.5 million in cash and cash equivalents and $9.3 million in loans held for sale and an increase of $18.3 million in other borrowed funds. Net loans increased $717,000, or 0.1%, from December 31, 2002 to March 31, 2003. Home Savings had increases of $55.9 million in construction loans, $5.7 million in consumer loans and $348,000 in commercial loans, which were partially offset by a $69.5 million decline in real estate loans. Due to growth in the construction and consumer loan portfolios, increases in nonperforming and delinquent loans, and the current economic conditions the allowance for loan losses increased $485,000, or 3.2%, to $15.6 million at March 31, 2003 compared to $15.1 million at December 31, 2002. The allowance for loan losses as a percentage of total loans increased to 1.04% at March 31, 2003 compared to 1.01% at December 31, 2002. Deposits decreased $13.0 million, or 0.88%, from December 31, 2002 to March 31, 2003. Decreases in Home Savings' deposits are primarily due to a $28.1 million decrease in checking accounts and a $26.5 million decrease in certificates of deposit, which were partially offset by a $41.6 million increase in savings accounts. Other borrowed funds increased $18.3 million primarily as a result of a repurchase agreement entered into by Butler Wick. Total shareholders' equity decreased $4.4 million from December 31, 2002 to March 31, 2003. The decrease was primarily due to treasury stock purchases and quarterly dividend payments partially offset by income for the quarter. Tangible book value and book value as of March 31, 2003 were $6.74 and $7.85 per share. United Community has been actively acquiring shares of its stock under its buy-back program. Currently, there are 276,247 shares eligible for repurchase under the current program, which United Community anticipates completing in the second quarter of 2003. "Stock repurchase programs continue to be a valuable method of utilizing excess capital, helping us achieve our capital management initiative," said McKay. "Since United Community became a public company in 1998, we have repurchased 3.5 million shares providing substantial liquidity for our shareholders. These purchases also enhance our earnings per share growth and return on shareholder equity," McKay added. Home Savings and Butler Wick are wholly owned subsidiaries of United Community Financial Corp. Home Savings operates 34 full service banking offices and 4 loan production offices located throughout Northern Ohio and Western Pennsylvania. Butler Wick has 12 office locations providing full service retail brokerage, capital markets and trust services throughout Northern Ohio and Western Pennsylvania. Additional information on United Community, Home Savings and Butler Wick may be found on United Community's web site: www.ucfconline.com. ### When used in this Form 8-K or in United Community's press release the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in United Community's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in Home Savings' market area, demand for investments in Butler Wick's market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. United Community cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. United Community advises readers that the factors listed above could affect United Community's financial performance and could cause United Community's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. United Community does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. UNITED COMMUNITY FINANCIAL CORP.
As of As of March 31, 2003 December 31, 2002 -------------- ----------------- (In thousands, except per share data) SELECTED FINANCIAL CONDITION DATA: ASSETS Cash and cash equivalents $ 54,389 $ 110,936 Securities 310,040 242,328 Federal Home Loan Bank stock 21,276 21,069 Loans held for sale 36,550 45,825 Loans 1,494,514 1,493,312 Allowance for loan losses (15,584) (15,099) Real estate owned 1,236 994 Goodwill 33,593 33,593 Core deposit intangible 4,711 5,101 Other assets 53,108 52,072 ---------------------- ----------------------- Total assets $ 1,993,833 $ 1,990,131 ====================== ======================= LIABILITIES Deposits $ 1,468,929 $ 1,481,901 Other borrowed funds 228,301 210,024 Other liabilities 26,407 23,637 ---------------------- ----------------------- Total liabilities 1,723,637 1,715,562 SHAREHOLDERS' EQUITY Preferred stock-no par value; 1,000,000 shares authorized and unissued at March 31, 2003 - - Common stock-no par value; 499,000,000 shares authorized; 37,802,081 and 37,803,269 issued, respectively 138,391 138,207 Retained earnings 174,637 172,080 Other comprehensive income 1,879 2,363 Unearned compensation (18,834) (19,724) Treasury stock, at cost; 3,387,116 and 2,558,214 shares, respectively (25,877) (18,357) ---------------------- ----------------------- Total shareholders' equity 270,196 274,569 ---------------------- ----------------------- Total liabilities and shareholders' equity $ 1,993,833 $ 1,990,131 ====================== ======================= Book value per share $ 7.85 $ 7.79 Tangible book value per share $ 6.74 $ 6.69
Three Months Ended March 31, 2003 2002 ------------ ------------- (In thousands, except per share data) SELECTED EARNINGS DATA (UNAUDITED): Interest income $ 29,741 $ 31,263 Interest expense 11,232 14,893 ------------ ------------- Net interest income 18,509 16,370 Provision for loan losses 696 696 Noninterest income: Commissions 3,175 3,382 Service fees and other charges 1,800 1,898 Underwriting and investment banking 118 33 Net gains (losses) Loans sold 2,010 776 Securities 348 605 Other (59) (1) Other income 583 1,065 ------------ ------------- Total noninterest income 7,975 7,758 Noninterest expense: Salaries and employee benefits 10,901 9,723 Occupancy 829 673 Equipment and data processing 2,344 1,819 Amortization of core deposit intangible 389 638 Other noninterest expense 3,692 3,899 ------------ ------------- Total noninterest expense 18,155 16,752 Income before taxes 7,633 6,680 Income taxes 2,653 2,425 ------------ ------------- Net income $ 4,980 $ 4,255 ============ ============= Basic earnings per share $ 0.16 $ 0.13 Diluted earnings per share $ 0.16 $ 0.13 Dividends paid per share $ 0.075 $ 0.075
Three Months Ended Three Months Ended Three Months Ended March 31, December 31, September 30, 2003 2002 2002 ------------------ ------------------ ------------------ (In thousands) AVERAGE DAILY BALANCE OF SELECTED FINANCIAL CONDITION DATA (UNAUDITED): Net loans (including allowance for loan losses $ 1,459,191 $ 1,500,940 $ 1,518,533 of $15,584, $15,099 and $14,865, respectively) Loans held for sale 41,142 36,218 14,922 Securities 294,982 246,754 257,725 Margin accounts 14,382 15,683 16,980 Other interest-earning assets 79,498 94,420 85,323 Total interest-earning assets 1,889,195 1,894,015 1,893,483 Total assets 1,997,894 2,002,717 2,003,574 Certificates of deposit 805,590 824,516 855,939 Interest-bearing checking, demand and savings accounts 644,270 599,144 595,866 Other-interest bearing liabilities 210,250 215,389 198,047 Total interest-bearing liabilities 1,660,110 1,639,049 1,649,852 Noninterest-bearing deposits 59,105 55,562 47,255 Total noninterest-bearing liabilities 63,073 89,736 83,463 Total liabilities 1,723,183 1,728,785 1,733,315 Shareholders' equity 274,711 273,932 270,259 Common shares outstanding for basic EPS calculation 31,669 31,892 31,773 Common shares outstanding for diluted EPS calculation 32,011 32,376 32,318 SUPPLEMENTAL LOAN DATA: Loans originated $ 267,489 $ 260,383 $ 220,129 Loans purchased 37,726 1,000 7,317 Loans sold 113,649 108,034 42,434 Loan chargeoffs 246 1,394 261 Recoveries on loans 35 28 35
As of As of As of March 31, December 31, September 30, 2003 2002 2002 -------------- ------------- ------------- SUPPLEMENTAL DATA: In (thousands, except employee data) Nonaccrual loans $ 14,732 $ 14,196 $ 13,466 Restructured loans 1,877 1,271 1,255 Other real estate owned 1,236 994 1,622 Total nonperforming assets 17,845 16,461 16,343 Loans serviced for others 436,782 386,218 341,027 Number of full time equivalent employees 769 774 789 Securities trading 19,939 5,060 44,401 Securities available for sale 290,101 237,268 196,809 Securities held to maturity 0 0 59,917 Federal Home Loan Bank stock 21,276 21,069 20,832 Fair value of held to maturity securities 0 0 62,914 REGULATORY CAPITAL DATA: Regulatory tangible capital $ 157,192 $ 150,821 $ 173,854 Tangible capital ratio 8.23 8.05 9.11 Regulatory core capital 157,192 150,821 173,854 Core capital ratio 8.23 8.05 9.11 Regulatory total capital 170,513 163,419 184,929 Total risk adjusted assets 1,351,232 1,295,667 1,318,398 Total risk adjusted ratio 12.62 12.61 14.03